Russia has issued a warning to Europe, stating that retaliation will be imminent if nearly $300 billion of Russian assets are seized by the West and used to support Ukraine. This comes after President Vladimir Putin sent troops into Ukraine in 2022, leading the United States and its allies to prohibit transactions with Russia’s central bank and finance ministry, effectively blocking around $300 billion of sovereign Russian assets in the West. The U.S. House of Representatives has passed legislation that includes a provision allowing the confiscation of Russian sovereign assets, although the majority of these assets are located in Europe.
Valentina Matviyenko, the speaker of the Russian upper house of parliament, has stated that Russia has prepared legislation to retaliate if its assets are seized. She also believes that Europe will suffer more than Russia in this scenario. However, specific details regarding Russia’s response have not been disclosed yet. One option being discussed by the West is to confiscate the income generated by the assets without seizing the actual assets themselves.
President Putin has claimed that the West has unleashed an economic war against Russia, but he remains confident in the resilience of the Russian economy. Despite sanctions, Russia’s economy grew by 3.6% last year. The Kremlin has repeatedly argued that any seizure of its assets would contradict the principles of free markets professed by the West. They also claim that it would undermine confidence in the U.S. dollar and euro, discourage global investment, and erode trust in Western central banks. Russia has declared its intention to challenge any confiscation of its assets in court.
There are concerns among Russian officials that foreign investors’ assets held in special “C” accounts in Russia could face a similar fate if Russian assets are confiscated. The exact amount of money held in these accounts remains unclear. Vyacheslav Volodin, the speaker of the lower house of the Russian parliament, has stated that Russia has grounds to seize Western assets in response to the actions of the U.S. House of Representatives. According to Volodin, out of the $280 billion of Russian assets frozen abroad, only $5 to $6 billion is located in the United States, while approximately 210 billion euros ($224 billion) is in the European Union.
The potential seizure of Russian assets by the West has significant implications for both Russia and Europe. As tensions escalate, it remains to be seen how this situation will unfold and what measures Russia will take to retaliate. The fear of setting a dangerous precedent with asset seizures looms over the discussions, and European officials are wary of the consequences. The economic and political ramifications of these actions will undoubtedly shape the relationships between Russia, Europe, and the West as a whole.
